Ethiopia is a least developed country with an
average GDP per capita income of USD 101.2 and Real
GDP growth rate for 4.5% of the period 1991/92-2002/03
(EEA, 2004: 6). More than 85% of the population is
engaged in agriculture, which has generated on the
average 47.5% of real GDP growth rate for the last twelve
years .The industrial sector’s contribution to real GDP
growth rate is 10.7 % for the last twelve years (NBE
2004: 1). The population size, which is close to
84,734,262, is increasing at a rate of 2.9% per annum
(ILo, 2003: 1). According to the International Labor
Organization report in 2000 urban unemployment in
Ethiopia was 24.7%, showing the seriousness of the
unemployment problem in urban areas. Besides,
Ethiopia’s Sustainable Development and Poverty
Reduction Program (SDPRP) published in July 2002 by
the Ministry of Finance and Economic Development
revealed that during the year 1999/2000 in Ethiopia the
proportion of people who were absolutely poor was
29.6%. According to MoFED (2004), the percentage of
the population under food poverty in rural areas is about
30.4% where as the corresponding figure for urban areas
stood approximately 25.7%.
Poverty reduction and sustainable development
in Ethiopia require a transformation from reliance on a
traditional agriculture to a rapid expansion of modern
agriculture, agribusiness, and the manufacturing sector,
which will create jobs for the urban unemployed, new
entrants to the labor market and migrant workers from the
rural areas. To this effect, the Government of Ethiopia has
taken a number of specific policy measures aimed at the
creation of enabling environment for the revival and
expansion of the private sector (FDRE, 2002: 2).